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Wednesday, May 17, 2006

Ecuador Follows Suit

I see that Ecuador has seized the producing assets of Occidental Petroleum in that country, following a lengthy contract dispute. While it would probably be overstating the case to put this in the same category as the recent nationalization of foreign gas producers in Bolivia, it's hardly good news for international energy companies, their investors, and energy consumers in general. From what I read here, it appears as though a technicality snowballed out of control, playing into the hands of nationalist politicians and opponents of globalization. As long as oil prices remain high, we're likely to see more of this sort of thing, though the biggest temptation for expropriation will probably come when prices start down, and national oil companies see their revenues fall.